14yr old Lottery Scam lands Family Behind Bars

Family sentenced to prison in for fraud after cheating the lottery.

We all dream of winning the lottery one day. We dream of what we might do with all that money. Buy a big house, a new car, put family members through college, maybe donate some to a worthy charity. For only the luckiest of players will that dream become reality.

For one family, the dream came true 14 years ago. But not in the way you might expect. This family worked a dubious lottery scam that bought $12.5 million in life’s most opulent luxuries—and a one-way ticket to prison.

Family Accused of Fraud for Cheating the Lottery

It all started in 2003 at the Variety Plus, a convenient mart and lottery retail outlet on Dundas Street in Burlington, Ontario. Kenneth Chung was a full-time employee, and his father, Jun-Chul Chung, worked there part-time. According to court documents, both were stealing lottery tickets from the store for an 8-month stint that ended in February 2004.

It wasn’t just small-time tickets, though. In December 2003, the patriarch of the family stole a winning Super 7 Lotto ticket worth $12.5 million. Being employees of the lottery retailer, they were not eligible to cash the ticket. So instead, they found someone else to do it.

On February 5, 2004, Kathleen Chung walked into the OLG’s Lottery Claims Centre in Toronto. She handed over the ticket in hopes of cashing in the $12.5 million prize. When asked if she was related to Kenneth Chung, employee of the Variety Plus where the ticket was validated, she said no.

Within moments, the pressure got to her. She broke into tears and admitted Kenneth is her brother. She was then asked where she purchased the ticket, but Kathleen said she couldn’t remember; that it might have been in the St. Catherine’s area while running delivery errands for her father’s business.

The OLG spent the next 10 months investigating the claim before reluctantly issuing Kathleen Chung a cheque for $12.5 million.

Insider Lottery Scams Go Under Microscope

Fast-forward four years to 2007. The OLG is heavily criticized in a scathing report for paying out $100 million to “lottery insiders”, despite suspicious circumstances. The Chung situation is a major highlight in the report, drawing outrage from the community.

With pressure mounting, the provincial authorities finally launch an investigation into the Chung family’s lottery winnings. Subsequently, the father, son and daughter were all arrested in 2010. After being charged with lottery fraud, they were released on bail. The charges were delayed for a staggering eight years.

Judge Convicts Family after 14 Years of High Life

Ontario Superior Court Justice Douglas Gray heard a tale of woe from the Chung family. They all claim to have suffered greatly following their 2010 arrest. Jun-Chul’s marriage fell apart. Kenneth lost an opportunity to purchase a Tim Horton’s franchise. Kathleen was disgraced when her three children learned of their mother’s criminal activities on the local news.

Her lawyer tried to lay the majority of the blame on the Ontario Lottery and Gaming Corporation for paying the prize in the first place. “If OLG had done what their duty was to have done, then Kathleen Chung would never have come into the possession of $12.5 million,” he argued.

Prosecutor David King was having none of it. Lies don’t hold a marriage together. The son’s intent to buy a business would have been “paid for with stolen lottery money”. Kathleen was perfectly willing to cash the ticket, lying to OLG officials to get her hands on the cash. And since 2010, bail restrictions were lax enough that the whole family lived in the lap of luxury for the last eight years.

Justice Gray saw the same picture before him on Tuesday. For a case of such “large scale fraud”, he sentenced the father to 7 years in prison. His daughter received a 4 year sentence, and his son—who the judge found didn’t play a role in stealing the $12.5 million ticket—to 10 months.

He did lay some of the blame on OLG. “They fell asleep at the switch at the very least when nobody in their right mind would have paid it out,” said Justice Gary.

Family’s Luck Not Dried Up Yet

The Attorney General has already seized about $8 million from the family, and is looking to collect another $14.5 million in restitution. That includes the original $12.5 million paid to Kathleen for cheating the lottery in 2004, and the additional $12.5 million the OLG paid to the real winners of that lottery in 2011, plus interest.

For now, though, the Chung family is out on bail yet again. Each are awaiting an appeal of forfeiture and restitution. They’re scheduled to appear back in court next month.